Bitcoin: backlash to reclaim privacy, security

DW: You're one of the authors of a new book on "Bitcoin and Cryptocurrency Technologies" and you call it a "comprehensive introduction." It's almost as if Bitcoin is going legal now - institutionalized by formal research. This currency that we know of as a kind of subculture, one that was created in some mystery, is it now coming of age?

Andrew Miller: That's one way to put it. A lot of the important technologies and underlying ideas embodied in Bitcoin are absolutely, fundamentally important. Channeling something my co-author Arvind Narayanan says, you know, "Why should researchers care about Bitcoin?" and his answer is, "We're going to be teaching things that are lessons from Bitcoin and cryptocurrencies in computer science in 20 years from now." That's from applying cryptography in ways we haven't seen before to the prevalence of reliable databases, there's a bunch of core ideas that are absolutely fundamental. And they can perhaps transcend the particular usage and communities around Bitcoin from the beginning and up to now.

There must be at least 100 cryptocurrencies - aside from digital or virtual currencies - and they share some of the technology, such as the "blockchain." But they're still relatively uncommon as a currency, and yet terms like Blockchain have entered common parlance, and it's being cited as useful for basic data encryption because you can tell when stuff has been tampered with. What makes it so powerful?

Blockchain technology is a really tricky word now because it's become pretty diluted so it's hard to say exactly what it means. There are two ways to look at it, though. One, it refers to a broadly-applied class of computer security protocol design techniques. This includes Consensus Protocol and Byzantine fault tolerance and using a hash chain to make a "tamper evident" log. Those ideas pre-date Bitcoin. But Bitcoin has made more engineers aware of them. Then there's a narrower view of what blockchain means - and it's what I thought it was going to refer to a couple of years ago - and it's closer to what's unique about Bitcoin and that is the idea of having a large public database that doesn't have any designated administrators. There was nothing like that prior to Bitcoin, and the fact that Bitcoin shows that, "Hey, maybe it is possible to build a huge public database that anyone can use," that blew our minds. Computer science did even anticipate it.

That's this idea of the public ledger that supposedly makes Bitcoin so secure. But there's a lot of confusion around that. On the one hand we hear the US government holds currency reserves in Bitcoin and on the other hand we hear it's the currency of choice for drug dealers on the darknet - because Bitcoin transactions are supposedly anonymous. But that's not correct, is it? You say it's more pseudonymous.

That's true. The original digital cash proposals always had privacy as a design first, but they didn't aim for this total public ledger without administrators - they had central administrators, with privacy guarantees. Bitcoin turned that on its head, because it built this innovative public ledger, but the transaction format on top of that doesn't really offer much privacy. It's pseudonymous. You don't have to register with your real name, but your transactions are generally linkable when you use the default software. Unless you take special measures to "mix" your transactions.

The ethics of anonymity

You talk about the "ethics of anonymity" in the book. What are they? Is all privacy a lie, as some technologists might have us believe, and transparency the only good? Or do we need privacy?

There are two meanings of this "privacy is a lie" attitude, and one is that it's inevitable, that there's this trend of surrendering all forms of privacy. And so if you try to build something that's private, it's just pointless - like trying to empty the water out of the ocean. I don't agree with that. There is value in these technical measures to ensure privacy. So it's not an inherently losing battle. As to the ethics question: a lot of my thinking on this has been developed while working as an advisor to Zerocash. I think it is absolutely important for privacy technology to be used by individuals. If you're a naive user, and you use the tools that are easiest to find, you don't get much privacy. Criminals are able to hide their tracks anyway, using dollars or by using Bitcoin by going out of their way to ensure their privacy. But individual users are suffering as a result of the tools not being widespread and easy to use. So I'm a big fan of any effort to make privacy by default and provide protection to users.

Privacy: public backlash

That's like PGP [Pretty Good Privacy] encryption and public keys - it's been around for so long, but it's so complicated to set up and few people use it. But do you think it's possible there may still be a backlash against these tacit demands for our data, and that this technology might be part of that backlash?

What, that this technology could be part of a vanguard of a new attempt to reclaim privacy?

Yes.

That absolutely I think is the case. It's one of the main reasons I think cryptocurrency research, and the development of this whole system, is so important. Bitcoin is doing some good in that direction. If you look at the story of PGP, you see users can't understand public key cryptography, the idea of checking signatures, and figuring out how to encrypt a message - it's just too hard to understand. But Bitcoin is better as a learning tool. It's pretty simple: you have your private key, you need it to spend your Bitcoin. If you lose your private key or someone takes it, they can take your coins. And if you want to send someone money, you need to know their public key. So people using Bitcoin are interacting with the public key cryptography concepts at a more visceral level. It's not hidden from them. They're engaging with it. So I could imagine Bitcoin becoming an important part of a shift in public awareness and education to a point where some of the story of PGP's failure might be undone. Cryptocurrencies could be part of a successful effort to reclaim our privacy and security.

Andrew Miller is an assistant professor at the University of Illinois, Urbana-Champaign, in Computer Engineering and in Computer Science. He is also an associate director of the Initiative for Cryptocurrencies and Contracts (IC3) at Cornell and an advisor to the zcash project. Along with Arvind Narayanan, Joseph Bonneau, Edward W. Felten, and Steven Goldfeder, he is a co-author of "Bitcoin and Cryptocurrency Technologies" (published by Princeton University Press, 2016).